After the U.S. housing bubble that left many consumers in very difficult financial situations, things are still bright for the mortgage borrower. Because many people had their credit score dipped to very low levels, they are unable to get loans at lower interest rates. However, if you want a low credit score mortgage, there are different options available that can enable you still own a home.
During the housing bubble crisis, many lost their homes through foreclosures, others declared bankrupt, and the few who managed to survive the predicament have been toiling in huge debts and trapped in a loop of borrowing. Owning a home is still a dream for many people in U.S. and having a bad credit can limit the options you have to get a mortgage loan. This is because lenders shy away from granting you loans.
The worst element about a bad credit is that it affects a myriad of life aspects such as insurance, getting credit cards, employment screening, as well as your ability to get credit facilities. However, you should not give up if you have bad credit because there are low credit score mortgage lenders, who may still be willing to lend you, but at a higher price.
One thing you can do is get the mortgage at the prevailing interest rates, starting repaying, and somewhere down the line in your repayment; you can refinance your mortgage at lower APRs. Shying away from mortgage loans does not provide a solution to repairing your credit. You need to borrow in order to be able to start repairing the damaged credit score. However, this time, you need to be very careful.
Although the housing bubble was caused by external factors, which might have been out of control by consumers, there was a problem because many consumers had actually overborrowed either by taking several loans or by taking extra ordinary principal amount that they could hardly manage to pay.
If you take control of your borrowing behaviour and only have limited loans at any given time, you can manage to service your mortgage loan smoothly. Considering that as at March 2013, it was revealed that buying a home in US was by average 44 percent cheaper than renting, this meant that even if prices were high, it was still a viable decision to buy a home.
One thing with consumers ailing with bad credit is that the sooner you start borrowing, the earlier you can come of debt. This is because, if you are able to get a low credit score mortgage facility, and repay without experiencing delinquencies, you can start improving your score. This makes it even better for you to refinance at very competitive rates in furture since you will have improved the score.
In addition, there are now many options for refinancing your mortgage that can enable you have better APRs for your loan. One year ago, buying a home was 46 percent cheaper than when you rented and today, there is a slight drop in that percentage at 44 percent. This means that despite the high prices on houses, the market is still favourable for home buyers who want to own their dream homes.
Although you may want to hold on in the anticipation that prices will drop, you may not know when this will happen because the market are influenced by other factors, which are difficult to predict. The best way is to stay a toll in repaying your mortgage without any delinquencies. If you are able to secure a home mortgage loan, this can provide you with time to get your financial strengths back in order, and also refinance the mortgage at lower APRs in the near future.
The first place you can check for low APR mortgage is the FHA and this is ideal for the first time buyers. The Federal Housing Administration –FHA, helps consumers who want to own homes by insuring the loans so that the lenders can offer better deals like low downpayments, low closing costs, and easy credit qualifying especially for people with bad credit.
The FHA may actually be what you need because it can enable you obtain a low credit score mortgage that attracts APRs as low as 3.5 of the buying price. In addition, the closing costs and fees are included in the loan and these deals may be available for 1-4 unit properties. On top of that, FHA has a loan that allows you to purchase a home, do some fix it renovations, and then include those costs in one loan.
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